BOSTON – MassHousing has provided $9.25 million in financing to an affiliate of the non-profit Retirement Housing Foundation (RHF) for the preservation and renovation of 134 units of affordable housing at Binnall House in Gardner. Binnall House is home to senior citizens and residents with disabilities, who will see the affordability of their units extended for at least 15 years.
The Binnall House refinancing is the first in the country in which a Housing Finance Agency (HFA) has completed a transaction through the Federal Housing Administration’s Housing Tax Credit Pilot Program. The Tax Credit Pilot Program allows borrowers to utilize federal low-income housing tax credits and an affordable fast-track mortgage product insured by the Federal Housing Administration (FHA). MassHousing is also the only HFA among 52 FHA-approved Tax Credit Pilot Program lenders.
“We are committed to offering the development community innovative financial products that preserve much-needed affordable housing, while improving the lives of Massachusetts residents,” said MassHousing Executive Director Tim Sullivan. “By combining an affordable FHA-insured mortgage with low-income housing tax credits the owners of Binnall House will be able to make substantial property improvements and ensure long-term affordability for senior citizens. MassHousing is proud to be the only Housing Finance Agency in the country to offer Tax Credit Pilot Program financing.”
MassHousing refinanced Binnall House through the Agency’s Multifamily Accelerated Processing (MAP)/Ginnie Mae Joint Venture Initiative with lender partner Rockport Mortgage Corporation. The Schochet Companies provided development consulting and its affiliate, Federal Management Co., Inc. is the property manager for Binnall House.
The Tax Credit Pilot Program enabled Binnall House’s owner, RHF, to deploy approximately $6 million in low-income housing tax credit equity toward renovations at the property. The combination of tax credits, with a mortgage insured by the FHA and guaranteed by Ginnie Mae, will allow RHF to make more substantial renovations to Binnall House than would have been possible through MAP financing alone.
MassHousing offers the MAP/Ginnie Mae loan program to the owners of rental housing through the U.S. Department of Housing and Urban Development (HUD). HUD approves mortgages in the MAP program for FHA insurance. The program provides lower interest rates while preserving and extending affordability for hundreds of low-income senior citizens and families.
“Rockport was pleased to partner with RHF, the Schochet Companies, and MassHousing on this preservation transaction that combined taxable HUD-insured financing under the tax credit pilot program with short-term, tax-exempt bonds,” said Daniel P. Lyons, Managing Partner of Rockport Mortgage Corporation.
As a condition of the MassHousing financing, RHF plans to renew the federal Section 8 Housing Assistance Payment Contract on 133 apartments at Binnall House for 20 years and include the remaining term of the current HAP contract, which expires in 2023. One apartment is occupied by a property manager. The use of the tax credits will extend affordability at Binnall House for at least 15 years.
MassHousing allowed RHF to pre-pay its existing mortgage on Binnall House, with a 5.04% interest rate, and refinance the property with a $9.25 million taxable first mortgage loan with a 3.05% interest rate. MassHousing also provided a tax-exempt construction loan to trigger the use of the tax credits.
Binnall House is an eight-story building located at 125 Connors Street in Gardner and consists of 118 one-bedroom apartments and 16 two-bedroom apartments for residents age 62 and over. Property renovations are planned as part of the transaction including building and unit upgrades as well as accessibility improvements.
The New England Affordable Housing Management Association (NEAHMA) has recognized Binnall House as a Community of Quality, which means it is certified as having achieved a high standard of excellence in the way it is managed, the services its provides residents, the experience and training of management personnel, and other criteria.
“Once again, MassHousing has shown itself to be a true innovator in financing the acquisition and development of affordable housing,” said Dr. Laverne R. Joseph, RHF’s President and CEO. “We are quite appreciative of the wonderful work we have done together in support of RHF’s mission to protect society’s most vulnerable seniors.”
MassHousing has financed or administers six rental housing communities in Gardner involving 719 units and provided 365 home mortgage loans in the city totaling $33.5 million in financing.